Is car insurance compulsory in New Zealand?

Do you legally need car insurance in New Zealand?

No. You need a warrant or certificate of fitness and current registration to drive on the road, but insurance is your choice. The Ministry of Transport has reviewed whether to bring in compulsory third party vehicle insurance, and none has been introduced.

The reason New Zealand is different from most comparable countries is ACC. In countries with compulsory third party insurance, a large part of what that insurance pays for is injury to people. Here, injury from a road crash is ACC's job, whoever was at fault, so compulsory injury cover has no work to do. What is left uninsured is damage to cars and property.

The Ministry of Transport's December 2009 report, written as part of a review of compulsory third party vehicle insurance, surveyed private vehicle owners:

“The survey found that 7.6 percent of respondents were either uninsured, or did not know if their vehicle was insured. This is comparable with places with compulsory motor vehicle insurance systems.”

— Ministry of Transport, Vehicle insurance in New Zealand, December 2009

That figure is old, and no newer official survey that we could find replaces it. It is the reason compulsory cover has been debated rather than introduced: most owners already insure voluntarily.

What happens if you crash without insurance?

If the crash was your fault, you are personally liable for the damage you caused to the other car and any property, and the other driver or their insurer can pursue you for it. Your own car's repairs are yours to pay. Injuries to anyone involved are still dealt with by ACC.

• Damage to the other car. The other driver's insurer will usually pay them, then come after you to recover what it paid. If they are uninsured too, they can pursue you directly.
• Your own car. Nobody pays for it but you.
• Injuries. ACC covers personal injury caused by accident, including on the road. Being uninsured does not change that.
• Disputes. Claims for damage to a car in an accident can go to the Disputes Tribunal, which hears claims up to $60,000.

“damage to a car in an accident”

— Disputes Tribunal, What the Tribunal can help with (listed as an example of a claim it hears)

A crash into an expensive car can cost more than the car you were driving. That is the risk third party cover exists for, and it is why third party only is the cheapest kind of cover: it insures the damage you do to others and nothing else.

What if an uninsured driver hits you?

If you have comprehensive cover, you can usually claim on your own policy and let your insurer pursue the other driver. Consumer Protection notes your insurer may chase compensation for you when the other driver has admitted fault and has no insurance. Without your own cover, you would have to pursue the driver yourself.

“In some cases your insurer may chase compensation for you if the person has admitted fault and doesn't have insurance.”

— Consumer Protection (MBIE), Car insurance

Some policies include a benefit for this situation, often called uninsured motorist cover, which pays towards your own car when an identified uninsured driver was at fault. It is common on third party policies as a limited extra. Whether yours has it, and what limit applies, is in the wording.

Is there any situation where insurance is required?

Not by law for a private car, but often by contract. A lender on a financed car commonly requires comprehensive cover for as long as the loan runs, and car-share or rental arrangements set their own insurance terms. Check the finance agreement, because breaking that condition can matter as much as the law would.

Comprehensive is the level lenders most often ask for on a financed car, because it is the only one that pays when the car itself is damaged in a crash you caused, and the car is the lender's security.

Which level of cover is the minimum worth having?

That depends on what you could afford to pay if things went wrong, and it is a question about you rather than a rule. The three levels sold here are third party only, third party fire and theft, and comprehensive. Our cover questionnaire walks through the questions that separate them, and the comparison guide sets them side by side.